The business of e-sports

With the increasing focus on building and popularizing leagues for Football, Kabaddi, Hockey, Badminton and other sports, India is growing as a sporting nation. Viewership and revenue for domestic leagues are growing year over year, with different sports starting to pick up steam with diverse audiences. The performance at the International level is also improving in some sports – for example, the Indian Soccer team moved up from rank 173 in March 2015 to 97 in December 2018. That speaks volumes for a nation that has always grappled with scams and politics ruling most of the sports landscape.

With more investments coming in the next years, we can expect that by the end of the next decade, we can be among the most powerful sporting nations, both in terms of performance and revenue. By 2023, analysts predict that the Indian sports and fitness goods market would be worth $5.5 Billion. Thus, it will be one of the biggest industries that are yet to be tapped by domestic businessmen. There will be several opportunities to build businesses around sports other than cricket.

But there is also an opportunity to grow in sports that do not take place on fields but on screens. E-sports, as they are called, are basically online gaming tournaments, where participants sitting in different parts of the world could be competing against one another. Games such as League of Legends, Counter-Strike, Call of Duty, etc. form the bulk of these gaming tournaments. These are all virtual games that don’t check your physical fitness, but your ability to think on the spot and response times. Both of these skills need years of training to compete at a global level.

On the viewership front, there is an entire parallel industry for watching professional gamers play games, started by twitch.tv. During the last year’s League of Legends Championship held in South Korea, 200 million viewers tuned in concurrently to watch the championship’s final match. For perspective, the tenth most popular sport, Golf, has a viewership of 450 million. Which means the esports industry is already half as big as Golf. At the same time, Twitch has 140 million unique monthly viewers on its site. Seeing the business value, Amazon bought Twitch for $970 million in 2014.

Yet, the involvement of India in E-sports remains small. India ranks in the 16th spot in terms of revenues earned from E-sports, far behind China, USA, and South Korea.

Our lagging behind in this sporting phenomenon can be attributed to the lack of good infrastructure. Tier 1 cities such as Delhi, Mumbai and Bengaluru may have good Internet speeds required for streaming, but much of the country still remains disconnected from high-speed broadband services that are essential to streaming.

We have also grown with this mentality of how computer games are always bad – they don’t even challenge someone physically. Going to play a game of cricket has a higher chance of approval from parents than going to play a game of Counter-Strike.

But things are improving.

India got its first major e-sports league in 2017 with U-Cypher. Organizers gave out 51 lakhs in prize money and partnered with MTV India to put the league on national television. By showing it on national television, the sport was able to reach Tier 2 and Tier 3 cities of the country, thus popularizing it. We can expect more variants of this league as it gets popular across the country.

As the sport grows, it brings tremendous opportunities to start new businesses. Let’s look at a few of them here:

1. Gaming cafes: Remember Cyber Cafes? The places where people used to pay money to use the internet? Gaming cafes are similar to Cyber Cafes in that they offer people the chance to access high-end equipment at small costs. While we already have several Gaming Cafes today, a lot of cafes need to upgrade their equipment. Providing the right environment for gaming is necessary. Though we have some startups working in this space, the market is huge and can easily absorb more startups.

2. Vernacular Games: Looking at the increasing prominence of games like Grand Theft Auto, more people playing games means more opportunity for creating original Indian games that are relevant to Indian contexts. In comparison, Sharechat, a Twitter-like app that was started in 2015 grew to be one of the most popular apps in India. Sharechat allows Indians to share content in 14 different Indian languages, making it usable by even the non-English speaking population. This has been one of the biggest reasons for the growth of the company.

3. Regional level competitions: Arranging competitions in colleges and schools across the country would lead to increased participation, which means more prize money can be doled out. E-sports competitions need gaming equipment, unlike sports that need fields. If companies master the management of conducting regional level competitions, it would create a growing revenue stream. We’ve already started to see this with local cricket leagues which are now streamed on YouTube channels like tenniscricket.in. There’s an opportunity for doing similar things for other sports, including e-sports.

As a big league grows, several small ones spawn up.

4. Online leagues: Similar to Cricket and Football Fantasy Leagues, a fantasy league for e-sports could be a great business opportunity. People could create their teams based on their intuition of professional players’ future performance. Depending on the actual performance of players, participants could be rewarded. This is already happening with apps like Dream11 and the opportunity is perfect for doing something for other sports.

5. Online gaming platforms: Platforms such as Twitch and YouTube Gaming already provide people with a steady income. Both these platforms are currently restricted to only English-speaking audiences. While most of the gaming audience in India adapt to the English games today, the scene could be different in five to ten years from now. Vernacular apps and platforms will provide us with an opportunity to reach a larger audience.

One of the biggest concerns with e-sports is that playing games on phones and computers are not good for health. I imagine similar concerns came up when televisions were introduced, but televisions have revolutionized the entertainment industry. Because of them, we have seen several more businesses created in the entertainment, media and journalism industries.

Instead of painting e-sports as entirely evil, we should aim to find the right balance between indoor and outdoor games. We need to allow children to experiment with different sports and let them find for themselves what they are good at. With a growing global e-sports culture, we would get better internationally only if we allow children to explore this domain.

While it might take us years to be dominant in the Olympics, it might be much easier to encourage people to play games on computers. Providing someone with a good computer is much easier than providing someone with access to swimming pools.

Business opportunities in e-sports are aplenty. Who knows, we might even have entire new untapped markets. Who knew that Twitch would be such a big company a decade ago? Today, an entire generation of gamers depends on Twitch for earning their monthly income.

The opportunity to get involved in e-sports is rife. Let’s not waste it thinking if we should be allowing children to play computer games or not.

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